Gold Weaker On More Profit-Taking, Technical Correction

(Kitco News) - Gold prices are moderately lower in early U.S. trading Thursday, on some more profit taking and a corrective technical pullback from recent gains that saw a nine-week high scored earlier this week. August Comex gold was last down $9.60 at $1,313.00 an ounce. Spot gold was last quoted down $6.20 at $1,312.75. December Comex silver last traded down $0.212 at $21.015 an ounce.

It was another relatively quiet trading affair overseas overnight. A two-day European Union summit begins Thursday. On the agenda is the potential for additional sanctions the EU could slap on Russia for its annexation of part of Ukraine.

Reports overnight said China authorities have uncovered $15 billion illegal gold- financing scheme that dates back at least two years. This could be putting some downside price pressure on the yellow metal Thursday. Chinese officials recently broke up a big, illegal copper financing operation in China, which sunk the copper market for a short time.

The civil war in Iraq is still an issue for the market place but it has at least temporarily moved off the front burner. Don’t be surprised in the coming days to see this matter move back into the spotlight of the market place and once again significantly impact some market prices.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Kansas City Fed manufacturing survey, and personal income and outlays.

Wyckoff’s Daily Risk Rating: 6.0 (Civil war in Iraq still has the world market place somewhat concerned but there have been no major new developments this week.)

(Wyckoff’s Daily Risk Rating is your way to quickly gauge investor risk appetite in the world market place each day. Each day I assess the “risk-on” or “risk-off” trader mentality in the market place with a numerical reading of 1 to 10, with 1 being least risk-averse (most risk-on) and 10 being the most risk-averse (risk-off), and 5 being neutral.

The London A.M. gold fix is $1,311.50 versus the previous P.M. fixing of $1,316.75.

Technically, August gold futures bulls still have the overall near-term technical advantage. Prices Tuesday hit a 10-week high and a three-week-old uptrend is still in place on the daily bar chart. The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the April high of $1,331.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at $1,300.00. First resistance is seen at the overnight high of $1,320.60 and then at this week’s high of $1,326.60. First support is seen at this week’s low of $1,305.40 and then at $1,300.00.

December silver futures are also seeing a corrective pullback after hitting a three-month high Wednesday. The silver bulls still have some upside technical momentum and have the near-term technical advantage. Prices are in a three-week-old uptrend on the daily bar chart. Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at the March high of $21.825 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $20.00. First resistance is seen at the overnight high of $21.13 and then at this week’s high of $21.28. Next support is seen at the overnight low of $20.915 and then at this week’s low of $20.82.